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Clarity for Digital ERP Confusion

The simple question of what ERP is today defies a simple answer. Are we talking about the classic, monolithic, on-premise ERP (that still has tremendous value)? Which ERP instances do we include (most companies have several in their ERP museum)? Where do we draw the line between core ERP functionality and the functionality provided by integrated cloud components (who hasn’t bolted SaaS offerings onto their ERP landscape?)?

There is no way around the fact that complexity reigns when it comes to ERP. To help our customers better understand and navigate today’s dynamic ERP waters, and to help us better meet our customers’ third-party service needs, NTT DATA recently enlisted IDG and CIO Magazine to conduct a survey of IT and business leaders.

No surprise that the survey results underscore increased ERP complexity:

73% agree that their ERP ecosystems have become more complex over the past 2 years.

33% report an increase in the number of ERP platforms/packages in use.

44% have a strategy in place for integrating on-premise and cloud environments (36% say this is a top priority over the next 12 months.)

Largely because it spans myriad, evolving technologies and touches every facet of business, the digitalization phenomenon currently engulfing us exacerbates complexity, adds to the confusion, and is giving rise to increased skepticism among business and IT leaders who’ve grown weary of marketing hype as they search for real-world value, meaningful and measurable.

As reported in ComputerworldUK, a survey of 107 SAP user organizations attending this year’s UK and Ireland SAP User Group (UKISUG) conference showed that 58% of respondents believe vendors and service providers create “too much hype” around the concept of digital transformation.

Additionally, 80% of survey respondents feel that some vendors intentionally repackage existing products to fit the ‘digitisation’ concept and only 2% feel that products aimed at supporting digital strategies deliver on promises.

SAP took a direct hit on the digital front, with only a fifth of respondents perceiving SAP as a leader in digital transformation; even less (18%) seeing SAP as an innovator; and the majority (51%) seeing SAP as a follower.

These results present both a challenge and opportunity to SAP and SAP partners and opens up opportunities for SAP partners to be thought-leaders.

Clearly, more genuine thought leadership, demonstrable business use cases, and SAP product roadmap clarity are needed.

On the brighter side, the UKISUG survey also showed that 30% of participating SAP customers have begun digital transformation strategies, and an additional 36% report that digital transformation is underway in certain areas of business but with no “overarching strategy.”

SAP S/4HANA gaining traction

While the SAP Simple Finance solution, announced in June 2014, marked the first step in the SAP S/4 HANA roadmap, SAP officially announced SAP S/4HANA in February of this year, and SAP S/4HANA Cloud Edition in May.

Available on-premise, in the cloud or as a hybrid deployment, SAP S/4 HANA enables SAP on-premise customers to begin shifting more IT into the cloud, leverage advances in big-data analytics and ubiquitous mobility, and step up the pace of innovation throughout their organization.
Most recently, at SAP TechEd, held November 10–12 in Barcelona, SAP announced a massive wave of innovation for SAP S/4 HANA covering the mission-critical business processes across lines of business such as finance, sales, service, marketing, commerce, procurement and sourcing, manufacturing, supply chain, asset management, research and development, and human resources.

SAP also announced that enterprises can now drive end-to-end digitized operations across their key business functions with the SAP S/4HANA Enterprise Management solution, the new name for the product formerly known as Simple Logistics.

SAP S/4HANA solutions for lines of business combine the digitized core capabilities included in SAP S/4HANA Enterprise Management with the on-premise and cloud solutions in the SAP portfolio for each line of business – such as SAP Cash Management application in finance; SAP SuccessFactors solutions in human resources; the Ariba Network in procurement, and SAP hybris solutions in marketing and commerce.

A detailed list of key simplifications and innovations for SAP for S/4 HANA can be found in SAP’s press release.

The market momentum has been record-breaking since the launch of SAP S/4HANA in February 2015, according to SAP, with more than 1,300 customers in only 8 months.

This traction, combined with the wave of innovation announced for SAP S/4HANA, should help to raise the perception of SAP’s leadership in digitalization.

SAP partners must provide clarity for digital ERP confusion

SAP partners currently manage more than 80% of all projects focused on SAP S/4HANA, according to SAP, and play a major role in selling the software and helping customers plan, run and optimize implementation and digital transformation projects.

There is no cookie-cutter tool for ERP digital transformation. Each company has it’s unique ERP environment, market forces, corporate objectives, industry imperatives, customer expectations, and enterprise IT priorities -- which is why, at NTT DATA, we provide a prioritization framework along with best practices to help guide our SAP customers along their digital transformation journey.

For net-new SAP customers, S/4 HANA is a no brainer. For existing SAP customers, S/4 HANA is your future. Mainstream maintenance for SAP Business Suite extends to 2025, so it's safe to say we're not on the cusp of a massive wave of upgrades from R/3 to S/4 HANA just yet, but laggards beware as SAP S/4HANA, the first digital core for digital business in the industry, is sure to impact your ERP landscape in a big way in the years ahead.